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QUESTION 1 a) Briefly discuss how ALDI's performance management system attempts to meet its strategic, administrative and developmental purposes. Use ONE example from the case of each purpose to support your answer. Answer: b) Identify the THREE activities involved in performance management. Provide one example from the case for each activity at ALDI. Answer: c) Identify TWO potential benefits of ALDI's feedback system, in which managers engage consistently with employees, and do not limit their communication and feedback for formal appraisal meetings alone. Answer:

QUESTION 1 a) Briefly discuss how ALDI's performance management system attempts to meet its strategic, administrative and developmental purposes. Use ONE example from the case of each purpose to support your answer. Answer: b) Identify the THREE activities involved in performance management. Provide one example from the case for each activity at ALDI. Answer: c) Identify TWO potential benefits of ALDI's feedback system, in which managers engage consistently with employees, and do not limit their communication and feedback for formal appraisal meetings alone. Answer:

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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For over 40 years, ALDI has stuck to the same guiding principle: Great quality shouldn't come at a high price; rather, great quality should come with everyday low prices. ALDI's story began in the German town of Essen in 1913, where the Albrecht family started their grocery business and where its headquarters are still located. Throughout the century, ALDI has grown from a small family business into an international retailer. ALDI currently has over 10,000 stores around the world, serving millions of customers in Europe, North America, Australia and China. It's on track to become the third-largest grocery chain in the US by store count by 2022. ALDI's success comes partly from extremely low prices. Two ways the chain keeps its prices so low is by selling mainly private-label products and the no-frills grocery shopping experience that ALDI is known for (stores typically have four to five aisles carrying all the essentials). Shoppers will find that more than 90% of the groceries offered are ALDI exclusive brands, hand-selected by ALDI to ensure that their products meet or exceed the national brands on taste, quality and, of course, price. ALDI has realized that "people are the key to every success" and it has an efficient human resource strategy which resonates with rest of its low-cost business strategies. The company focuses on less but more efficient employees. To ensure efficiency, the company uses thrifty strategies. Customers have to pay a quarter to use the shopping cart, which they get back when they return the cart. This reduces the requirement for extra workers to collect and return the stray carts. Products are displayed in their designed shipping boxes to help save time and human resources to restock shelves and customers bag their own groceries. These practices allow the company to hire less employees, thereby fostering communication and allowing ALDI the opportunity to offer the market-leading wages and strong employee benefits policy that it is well-known for. ALDI's performance management system aims at getting employees to focus more on the activities that directly contribute to its success. Managers clearly communicate the results that ALDI is seeking from the organization as a whole and for each store. ALDI also communicates which behaviours are linked to success for each specific role so that employees know what they need to do to succeed in their role. Although all employees have at least one formal performance review/appraisal each year, regular informal employee feedback is encouraged on a day-to-day basis. During formal feedback sessions, managers provide employees with information about their performance with the aim of either motivating them to eliminate performance deficiencies through training, or to continue to perform above par. New employees are also given the opportunity to participate in training and development programs that enable them to carry out their roles effectively and feel empowered in their roles. New hires get training covering the complete spectrum of management from store operation, product trading, financial, and logistic & property management. ALDI's reward system extensively makes use of these formal and informal feedbacks, as decisions about bonuses and promotions are based on the combined performance of company, team and individual. Although sales and productivity bonuses were typically reserved for store managers, in March of 2020, ALDI gave all staff at each store a 10% bonus to say "thank you for all their hard work during the coronavirus epidemic. According to one employee, "A $1,300 check every 2 weeks is pretty good for a job that requires no discernible skills. We also get many cool little perks, amazing healthcare, on the clock lunch breaks, dollar an hour bonus working on Sundays, paid holidays, etc. They definitely take care of you and reward you for your dedication." The ALDI International Expatriate Program offers experienced District Managers the chance to experience the business in an entirely different culture. For two years, participants are immersed in one of the many ALDI locations worldwide. Through this, participants gain the perspective and insight necessary to take their career even further within the organization. After being selected for the program, employees start with an in-country, 10-week training and orientation program. There, they work with local District Managers and Store Managers to acclimate themselves to their new district and new stores. A Peer Advisor is assigned temporarily to assist in finding an apartment and show them around their new neighbourhood. Once this orientation is complete, the expatriates begin work as District Managers in their assigned locations. After three and a half years of being a District Manager, Chester Arthur relocated from ALDI Batavia, Illinois, U.S.A to ALDI Putuo District, Shanghai, China as part of the Expatriate Program. He describes his initial experience as follows; "When I first arrived in Shanghai, one of the first things that excited me was how vibrant the city is, retaining its Chinese roots while still offering the amenities that you would expect in a Western country. There was always something new to explore in the hutongs (narrow alleys) or elsewhere in the city!" When he started work he began to notice just how different the Chinese culture was from Western culture. "It is quite a closed community among the local employees and relations with foreigners are 'pragmatic'. Other managers would only interact with me if there is some 'business involved, but among themselves, their ties are so strong that an employee might forego a promotion to continue to work with his team on a project." Another thing that surprised Chester was the hierarchical nature of Chinese society that pervaded the business world as well. "Employees would communicate with their superiors in such a way that even if they do not agree with what their superiors are saying, they would go along with them because of the intrinsic nature of the Chinese which is to be subservient and respectful of authority. As a manager, subordinates were unwilling to engage with me in anything other than formal communication. This level of formality between Chester, his colleagues and subordinates coupled with the language barrier left him at first feeling "a bit lonely at times and frustrated." Over time, Chester began to settle in to his new role and he joined expat-oriented support groups like "City Weekend" and "That's Shanghai" which assisted him greatly in coping with his transition and understanding both corporate and societal culture. According to Chester, "I love living in Shanghai now. At first it was hard to adapt to this completely different way of life, but once you stick it out and display flexibility and determination, you'll be able to immerse yourself in a new culture, make new friends, travel and explore and gain a new personal perspective as well as a new understanding of the business. You won't want to leave." After completing his expatriate assignment, Chester returned to the US and resumed his work as a District Manager. He found this transition a bit difficult as in Shanghai, he enjoyed additional purchasing power from premiums and incentives paid to him by ALDI, but he returned home to the same position and level of pay he earned before he left for China. Despite these difficulties faced by ALDI workers returning from overseas assignments, this grocer was named on the Forbes list of "America's Best Large Employers" for five years in a row. That progress ties in with the company's overall business model, and is consistent with an approach to reduce costs by minimizing waste and passing savings along to shoppers. That formula, consistently executed over time, continues to serve ALDI well.
Transcribed Image Text:For over 40 years, ALDI has stuck to the same guiding principle: Great quality shouldn't come at a high price; rather, great quality should come with everyday low prices. ALDI's story began in the German town of Essen in 1913, where the Albrecht family started their grocery business and where its headquarters are still located. Throughout the century, ALDI has grown from a small family business into an international retailer. ALDI currently has over 10,000 stores around the world, serving millions of customers in Europe, North America, Australia and China. It's on track to become the third-largest grocery chain in the US by store count by 2022. ALDI's success comes partly from extremely low prices. Two ways the chain keeps its prices so low is by selling mainly private-label products and the no-frills grocery shopping experience that ALDI is known for (stores typically have four to five aisles carrying all the essentials). Shoppers will find that more than 90% of the groceries offered are ALDI exclusive brands, hand-selected by ALDI to ensure that their products meet or exceed the national brands on taste, quality and, of course, price. ALDI has realized that "people are the key to every success" and it has an efficient human resource strategy which resonates with rest of its low-cost business strategies. The company focuses on less but more efficient employees. To ensure efficiency, the company uses thrifty strategies. Customers have to pay a quarter to use the shopping cart, which they get back when they return the cart. This reduces the requirement for extra workers to collect and return the stray carts. Products are displayed in their designed shipping boxes to help save time and human resources to restock shelves and customers bag their own groceries. These practices allow the company to hire less employees, thereby fostering communication and allowing ALDI the opportunity to offer the market-leading wages and strong employee benefits policy that it is well-known for. ALDI's performance management system aims at getting employees to focus more on the activities that directly contribute to its success. Managers clearly communicate the results that ALDI is seeking from the organization as a whole and for each store. ALDI also communicates which behaviours are linked to success for each specific role so that employees know what they need to do to succeed in their role. Although all employees have at least one formal performance review/appraisal each year, regular informal employee feedback is encouraged on a day-to-day basis. During formal feedback sessions, managers provide employees with information about their performance with the aim of either motivating them to eliminate performance deficiencies through training, or to continue to perform above par. New employees are also given the opportunity to participate in training and development programs that enable them to carry out their roles effectively and feel empowered in their roles. New hires get training covering the complete spectrum of management from store operation, product trading, financial, and logistic & property management. ALDI's reward system extensively makes use of these formal and informal feedbacks, as decisions about bonuses and promotions are based on the combined performance of company, team and individual. Although sales and productivity bonuses were typically reserved for store managers, in March of 2020, ALDI gave all staff at each store a 10% bonus to say "thank you for all their hard work during the coronavirus epidemic. According to one employee, "A $1,300 check every 2 weeks is pretty good for a job that requires no discernible skills. We also get many cool little perks, amazing healthcare, on the clock lunch breaks, dollar an hour bonus working on Sundays, paid holidays, etc. They definitely take care of you and reward you for your dedication." The ALDI International Expatriate Program offers experienced District Managers the chance to experience the business in an entirely different culture. For two years, participants are immersed in one of the many ALDI locations worldwide. Through this, participants gain the perspective and insight necessary to take their career even further within the organization. After being selected for the program, employees start with an in-country, 10-week training and orientation program. There, they work with local District Managers and Store Managers to acclimate themselves to their new district and new stores. A Peer Advisor is assigned temporarily to assist in finding an apartment and show them around their new neighbourhood. Once this orientation is complete, the expatriates begin work as District Managers in their assigned locations. After three and a half years of being a District Manager, Chester Arthur relocated from ALDI Batavia, Illinois, U.S.A to ALDI Putuo District, Shanghai, China as part of the Expatriate Program. He describes his initial experience as follows; "When I first arrived in Shanghai, one of the first things that excited me was how vibrant the city is, retaining its Chinese roots while still offering the amenities that you would expect in a Western country. There was always something new to explore in the hutongs (narrow alleys) or elsewhere in the city!" When he started work he began to notice just how different the Chinese culture was from Western culture. "It is quite a closed community among the local employees and relations with foreigners are 'pragmatic'. Other managers would only interact with me if there is some 'business involved, but among themselves, their ties are so strong that an employee might forego a promotion to continue to work with his team on a project." Another thing that surprised Chester was the hierarchical nature of Chinese society that pervaded the business world as well. "Employees would communicate with their superiors in such a way that even if they do not agree with what their superiors are saying, they would go along with them because of the intrinsic nature of the Chinese which is to be subservient and respectful of authority. As a manager, subordinates were unwilling to engage with me in anything other than formal communication. This level of formality between Chester, his colleagues and subordinates coupled with the language barrier left him at first feeling "a bit lonely at times and frustrated." Over time, Chester began to settle in to his new role and he joined expat-oriented support groups like "City Weekend" and "That's Shanghai" which assisted him greatly in coping with his transition and understanding both corporate and societal culture. According to Chester, "I love living in Shanghai now. At first it was hard to adapt to this completely different way of life, but once you stick it out and display flexibility and determination, you'll be able to immerse yourself in a new culture, make new friends, travel and explore and gain a new personal perspective as well as a new understanding of the business. You won't want to leave." After completing his expatriate assignment, Chester returned to the US and resumed his work as a District Manager. He found this transition a bit difficult as in Shanghai, he enjoyed additional purchasing power from premiums and incentives paid to him by ALDI, but he returned home to the same position and level of pay he earned before he left for China. Despite these difficulties faced by ALDI workers returning from overseas assignments, this grocer was named on the Forbes list of "America's Best Large Employers" for five years in a row. That progress ties in with the company's overall business model, and is consistent with an approach to reduce costs by minimizing waste and passing savings along to shoppers. That formula, consistently executed over time, continues to serve ALDI well.
QUESTION 1 a) Briefly discuss how ALDI's performance management system attempts to meet its strategic, administrative and developmental purposes. Use ONE example from the case of each purpose to support your answer. Answer: b) Identify the THREE activities involved in performance management. Provide one example from the case for each activity at ALDI. Answer: c) Identify TWO potential benefits of ALDI's feedback system, in which managers engage consistently with employees, and do not limit their communication and feedback for formal appraisal meetings alone. Answer:
Transcribed Image Text:QUESTION 1 a) Briefly discuss how ALDI's performance management system attempts to meet its strategic, administrative and developmental purposes. Use ONE example from the case of each purpose to support your answer. Answer: b) Identify the THREE activities involved in performance management. Provide one example from the case for each activity at ALDI. Answer: c) Identify TWO potential benefits of ALDI's feedback system, in which managers engage consistently with employees, and do not limit their communication and feedback for formal appraisal meetings alone. Answer:
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